May 08, 2007

YTB, A SCAM, A CULT OR THE REAL THING? by Peter Stilphen, MCC

I'm planning to spend my time in the coming blogs to discuss, in my opinion, the good and bad guys in the travel business especially the MLM companies, and the "card mills." This month we will concentrate on YTB. Keep in mind that the opinions shared are my own and not of any company or organization. I have researched the information provided, therefore, my comments are factual. Again, any opinions expressed are my own.

I don't know what it is about MLM companies and card mills that I like to write about. It's probably because I am the CEO of a nationally known Host Agency and am much closer to their activities than most. Most importantly, I never like people taking advantage of others for a profit unless both are on equal footing. MLM's have always been around and probably always will be. At least I will do my small part in bringing these people out from under their rocks.

You will need to know a little bit about YTB International and then we will get down to the good stuff.

YTB International, a public company since 2004 has a multi segmented business model and operates through three subsidiaries, YOUR TRAVEL BIZ.COM, YTB TRAVEL NETWORK INC and REZCONNECT TECHNOLOGIES INC.

YOUR TRAVEL BIZ is the marketing arm that establishes online travel agencies and compensates them via a multi-level commission structure. YTB TRAVEL NETWORK contracts with online travel agencies providing online booking systems, fulfills orders and pays commissions. REZCONNECT operates VACATION CENTRAL providing online booking engines and also franchises travel agencies such as in Wal-Mart stores. I understand that they have lost most of the Wal-Mart businesses. VACATION CENTRAL also claims to be a "Host Agency." If that is the truth than I'm the tooth fairy.

YTB and its subsidiaries are very controversial in the manner in which they do business and recruit consumers to sell travel as well as participate in their alleged pyramid schemes. They operate mostly outside the mainstream travel industry and are not members of the more notable travel organizations either by choice or simply due to ineligibility. YTB claims to have over 60,000 consumers signed up to which they have issued photo ID cards. I use the word consumer as opposed to travel agents because the vast majority of their base are naive consumers who constantly fall for their MLM skullduggery. To be fair, there is also a group of experienced and serious travel agents among the mix. Many of them are beginning to see the light and moving on. The others that hang in there like the possibilities that dual income potentials offer, but they are the ones who think they can become rich quickly. Like any MLM scheme, the ones at the top or the one who came in early are the only ones that stand a chance.

YTB and other similar companies are still courted by most of the travel suppliers. The reason is simple. Sell to whoever will buy your product. I can't blame them, I would probably do the same. I feel that many suppliers now see the advantage of a well trained travel agent and are now offering all kinds of resources to the serious travel agent. That is where the future lies and not filling up their fam trips with hobbyists seeking a cheap vacation. MLM and card mill members far outnumber the legitimate travel agent. We need to turn this around.

I have personally talked with YTB affiliates on the phone and at travel shows and have received mixed comments. My Host Agency and other Hosts regularly sign up the more serious YTB agents. Other YTB people live and die YTB. Trying to talk to these people is about as difficult as trying to talk someone into leaving a cult. They are totally brainwashed as this is the effect MLM companies leave with you. You just need to visit their chat rooms to see this. Others are confused and those are the ones who will ask me and others questions.

There are very few YTB agents making any money. MLM schemes have been around since the cave man and will be around until our world is gone. There have been a few successful and profitable MLM companies around such as Mary Kay and Amway but YTB is not one of them.

Here are a few facts about YTB you may want to know if you are contemplating becoming a follower.

* YTB has never made a profit since it started operations and has accumulated 14 million dollars in losses to date.

* YTB has not filed its financials for all of 2006 and to date.

* YTB has been de-listed from the O-T-C Bulletin and now shows on the so called "Pink Sheet" because it failed to file its financial reports with the Securities and Exchange Commission.

* YTB's stock has been on the rise lately due to its overzealous affiliates running up the stock price. YTB refers to these affiliates as "Gung Ho's." At the same time one of the corporate officers has been selling his stock.

* YTB revenues come mainly from selling business opportunities rather than from selling its core product; travel.

* YTB guarantees a minimum commission for recruiting even more participants.

* One of YTB's operators include a minister whose primary accomplishment is building a large church congregation.

* YTB's compensation program is tied to the promise to issue large blocks of stock at a set price much below today's market price.

In summary, multi-level marketing is not illegal. Most collapse because of potential abuses in the business structure that creates the condition of a Ponzi scheme. Many MLM companies collapse within 5 years. What are YTB's real numbers? Can YTB's current business model ever be profitable? Would regulators be concerned if YTB participants are being encouraged to form an affinity group to buy the stock? What are the legal and financial effects of promises of large blocks of below market stock into an MLM organization at $1.00 per share?

Consumers or potential travel agents looking at YTB and other MLM companies and card mills such as Pro-Travel, World Ventures, Travelwize, Coastal Vacation Club, Travelogia, VIP Travel Team and GTI should be careful and don't fall for the hype, gimmicks and high pressure tactics. If you are serious about travel seek out a reputable Host Agency and not one of these bums.

Next month's blog will be more on the MLM agencies and the card mills with recommendations.

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